The Hikkake pattern is a subtle but powerful price action signal used by traders to identify false breakouts and possible trend reversals. Despite its reliability, many traders misinterpret or misuse the pattern, leading to failed trades and avoidable losses. In this post, we’ll explore the most common mistakes traders make when trading the Hikkake pattern, and how to avoid them.

🔍 What is the Hikkake Pattern?

Before diving into the mistakes, let’s quickly recap what the Hikkake pattern is.

The Hikkake (meaning “trap” in Japanese) pattern occurs when there is an inside bar, followed by a false breakout in one direction, which is quickly reversed. This reversal is the actual trading signal.

✅ Ideal Hikkake Pattern Structure:

  1. An inside bar – a candle with a smaller range than the previous candle.
  2. A breakout from the inside bar’s range (often a fake move).
  3. A reversal that invalidates the breakout – this is the actual signal.

🚫 Common Mistakes While Trading the Hikkake Pattern

1. Trading the Initial Breakout Instead of Waiting for the Trap

Mistake: Many traders jump in as soon as the price breaks the inside bar’s range, thinking it’s a breakout.

Why it’s a problem: The Hikkake pattern starts with a false breakout. If you enter here, you’re walking into the trap, not exploiting it.

Example:

  • Inside bar formed between ₹100 and ₹110.
  • Next candle breaks out to ₹112 — you go long.
  • Price quickly drops to ₹97 — you just got trapped.
  • The real Hikkake trade was to short below ₹100 after the false breakout.

Fix: Always wait for the reversal after the breakout to confirm the pattern.

2. Ignoring the Overall Market Context

Mistake: Trading the Hikkake in isolation without considering trend, volume, or support/resistance.

Why it’s a problem: Patterns don’t exist in a vacuum. A Hikkake pattern in a strong trending market is more likely to fail.

Example:

  • A Hikkake short setup appears in a strong uptrend with rising volume.
  • You short, expecting a reversal.
  • Price instead continues upward, stopping you out.

Fix: Always align Hikkake setups with broader market conditions.
Use it as a continuation pattern in trending markets, and as a reversal signal only at key resistance/support levels.

3. Using Tight Stop Losses

Mistake: Placing stop losses too close to the entry point, often just above/below the previous candle.

Why it’s a problem: The Hikkake pattern thrives on fakeouts and volatility. A tight stop means you’ll get wicked out before the real move begins.

Example:

  • Short entry at ₹98 with SL at ₹101.
  • Price spikes to ₹101.20 before dropping to ₹90.
  • You’re out of the trade with a loss, even though the setup worked.

Fix: Use ATR-based or structure-based stop losses. Allow some breathing room for the pattern to develop.

4. Not Waiting for Confirmation

Mistake: Entering as soon as the price reverses the breakout, without waiting for confirmation.

Why it’s a problem: Reversals can be noisy. Jumping in too soon increases the risk of false signals.

Example:

  • Inside bar: ₹150 – ₹155.
  • Breakout to ₹157, then drop back to ₹154.
  • You enter short, but price bounces again to ₹158.

Fix: Wait for the second candle to close below the inside bar’s low for short trades, or above the high for long trades.

5. Forcing the Pattern Where It Doesn’t Exist

Mistake: Trying to find Hikkake patterns in every price movement.

Why it’s a problem: Overfitting leads to poor trade quality and emotional decision-making.

Example:

  • Price fluctuates between ₹200-₹210 over multiple candles.
  • You assume one of them is an inside bar and enter a Hikkake trade, but there’s no clear setup.
  • You get chopped out in sideways action.

Fix: Be selective and strict with your pattern rules. The inside bar should be well-defined, followed by a clear breakout and reversal.

6. Ignoring Volume Clues

Mistake: Not considering volume during the breakout and reversal phases.

Why it’s a problem: Volume confirms the strength or weakness of a move. A valid Hikkake often has high volume on the false breakout and low volume on the trap.

Example:

  • Breakout candle has high volume, reversal candle has low volume.
  • Price doesn’t move significantly after – the reversal is weak.
  • Trade ends up flat or fails.

Fix: Look for volume divergence: spike in volume on breakout, then drying up during the reversal — a sign the initial move was unsustainable.

7. Lack of Proper Risk Management

Mistake: Betting too much on a single Hikkake pattern, expecting it to work every time.

Why it’s a problem: No pattern is 100% reliable. Poor risk management leads to account damage even with good setups.

Fix: Stick to your risk limits – typically no more than 1-2% of your capital per trade. Always use a stop loss.

✅ A Real-World Hikkake Trade Example

Let’s walk through a textbook example from a stock:

  • Stock: Tata Motors
  • Date: Hypothetical Setup
  • Inside Bar Range: ₹625 – ₹635
  • Breakout: Price moves up to ₹638 (false breakout)
  • Next day: Price drops to ₹623 (trap triggered)
  • Entry: Short below ₹625
  • SL: ₹638
  • Target: ₹610 (based on previous support)

Result: Target hit in two sessions. Clean Hikkake pattern.

🧠 Final Tips for Mastering the Hikkake Pattern

  • Practice spotting the pattern on historical charts.
  • Combine it with support/resistance, trendlines, or indicators like RSI.
  • Be patient — quality Hikkake setups are rare, but worth the wait.
  • Keep a trading journal to review wins and losses with this setup.

📝 Conclusion

The Hikkake pattern can be a powerful tool in your trading arsenal — if used correctly. Avoid the common mistakes discussed above by combining price action discipline with market context, volume analysis, and solid risk management.

By practicing patiently and learning from your failed trades, you’ll be able to spot real Hikkake patterns with confidence and consistency.